The ECB meeting did not bring anything new on the table. The European Central Bank has held its rates unchanged and increased its forecast for growth for the next years. In addition, officials believe that the inflation won’t reach the target by 2020. This is what we call “Buying Time” to actually let inflation run.

It is without surprise that ECB members renewed their commitment regarding the asset purchase program that should run until next September. The amount added on the overall money supply each month is clearly massive and growth is exponential. Mario Draghi was very happy of “the strong pace of economic expansion” as well as the usual “improvement in the growth outlook”. Unfortunately we did not have a word concerning the cost of the growth. The truth is that one euro of growth costs way more than what it brings.

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As for the Fed, the key for the ECB is to let inflation run without raising rates in order to kill the massive debt accumulated. By stating that the inflation is too low, the ECB is selling a dovish message that markets are too happy to buy as assets never stops to increase. And then the ECB is getting time hoping that inflation goes higher.

This report has been prepared by AC Markets and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by AC Markets personnel at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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